please read the case(CASE 4.3 PHILIPS VERSUS MATSUSHITA: THE COMPETITIVE BATTLE CONTINUES) and write the answer
the shot answer question(1-9questions) will find in the PDF
Short answers
1. Briefly summarize the benefits and risks of a company engaged as an OEM (original equipment manufacturer)
3. List both the benefits and obstacles posed by governments in the process of globalization
4. What are the benefits of a centralized hub structure?
5. Briefly explain whether Apple is a center for global innovation model.
6.what are some of the risks for an ebtity to engage in globalization
7.what are the different possible paths that an entity can follow to become international/global?
8.List the differences between a decentralized federation structure and a corrdinated federation?
9.List the various criteria managers use to measure distance.
Philips vs Matsushita
1. How did Philips become successful? What are its core competencies? Did it follow a particular model of internationalization?
2. At the time of the case, prepare a brief analysis of its strengths, weakness, opportunities and threats (SWOT)
3. Was it able to implement its strategic advantages in its organization?
4. Prepare a SWOT analysis of Matsushita at the time of the case
5. In part based on this analysis, how was Matsushita able to surpass Philips? What competencies gave them competitive advantage.
6. What type of strategies did Matsushita follow in its international expansion?
7. What advice would you offer to Philips? What do you consider the benefits of splitting the entity as described.
8. What advice would you offer to Matsushita? Can they successfully challenge the Koreans (LG and Samsung)?
1
CAN I PURCHASE A BMW THAT IS “MADE IN THE UNITED STATES”?
YES
BUT IS IT A GERMAN CAR?
WHAT IS THE COUNTRY OF ORIGIN OF THE CAR?
WHY DOES BMW MANUFACTURE IN THE UNITED STATES?
WHAT IS GLOBALIZATION?
THE PROCESS OF INTERNATIONAL INTEGRATION FROM THE EXCHANGE OF IDEAS, PRODUCTS AND CULTURE. ALTERNATIVELY, ONE CAN SAY “GLOBALIZATION IS ABOUT GROWING WORLDWIDE INTERCONNECTIVITY” (STEGER)
IN BUSINESS, IT IS THE EXCHANGE OF PRODUCTS AND SERVICES
THIS EXCHANGE IS FACILITATED BY (BUSINESS) ENTITIES – ENTITIES THAT MAY BE LOCAL IN NATURE OR GLOBAL IN NATURE
ENTITIES THAT ARE LOCAL WILL CONTRIBUTE TO THIS EXCHANGE BY PURCHASING OR SELLING PRODUCTS OR SERVICES
ENTITIES THAT ARE GLOBAL IN NATURE WILL CONTRIBUTE TO THIS EXCHANGE BECAUSE, IN ADDITION TO PURCHASING OR SELLING PRODUCTS INTERNATIONALLY, THEY HAVE A PHYSICAL PRESENCE IN MULTIPLE COUNTRIES THROUGH FOREIGN DIRECT INVESTMENT (FDI) OR SOME OTHER EQUITY POSITION
OTHER INTERNATIONAL ORGANIZATIONS
IN THE 1944 BRETTON WOODS CONFERENCE, THE UNITED STATES AND GREAT BRITAIN LAID THE FRAMEWORK FOR THE EXPANSION OF INTERNATIONAL ECONOMIC ACTIVITIES. IN ADDITION TO THE ESTABLISHMENT OF GATT, THE
INTERNATIONAL MONETARY FUND (IMF) AND
THE WORLD BANK
WERE ESTABLISHED.
CURRENCY EXCHANGE RATES WERE ALSO ESTABLISHED AND LINKED TO A FIXED GOLD VALUE OF THE U.S. DOLLAR
THE U.S. ABANDONED THE BRETTON WOODS CURRENCY VALUATION IN 1971
Has mercantilism returned?
CLASSICAL MERCANTILISM IS THE BELIEF THAT NATION STATES SHOULD GENERATE TRADE SURPLUSES (EXPORT MORE THAN THEY IMPORT) WHICH THEN STRENGTHEN THE NATION AND CONTRIBUTE TO THE SECURITY OF THE NATION.
TO SOME EXTENT THE SUCCESS OF GLOBALIZATION HAS FORCED NATIONS TO RECONSIDER THE APPEAL OF MERCANTILISM, SOMETHING THAT HAD GROWN OUT OF FAVOR AFTER THE SECOND WORLD WAR.
EVIDENCE OF THIS RESURGENCE CAN BE SEEN IN PROTECTIONIST POLICIES AND GREATER RESTRICTIONS ON FOREIGN DIRECT INVESTMENT (FDI). A FORM OF ECONOMIC NATIONALISM.
HAS FDI BEEN THE KEY TO A NATION’S GROWTH IN THE SECOND HALF OF THE 20TH AND FIRST DECADES OF THE 21ST CENTURIES?
WHAT IS A TRANSNATIONAL ENTITY?
AN ENTITY THAT SIMPLY EXPORTS OR IMPORTS?
AN ENTITY THAT LICENSES ITS PRODUCT(S) INTERNATIONALLY?
AN ENTITY THAT HAS A MINORITY INTEREST IN AN ENTITY ABROAD, EXERCISING LITTLE OR NO MANAGERIAL CONTROL?
ALL OF THE ABOVE ARE EXAMPLES OF INTERNATIONAL OPERATIONS BUT ARE NOT EXAMPLES OF A MULTINATIONAL OR TRANSNATIONAL ENTITY
AN ENTITY THAT HAS SIGNIFICANT DIRECT INVESTMENT IN FOREIGN COUNTRIES AND EXERCISES ACTIVE MANAGEMENT OVER THAT INVESTMENT IS A MULTINATIONAL ENTITY
TRANSNATIONAL entities
DISNEY
COCA COLA
STARBUCKS
APPLE
PROCTOR & GAMBLE
GENERAL ELECTRIC
BOEING
DELTA AIRLINES
JPMORGAN CHASE
7
GLOBAL ENTITIES (CONTINUED)
AMAZON
WALMART
EXXON MOBIL
MASTERCARD
NIKE
PFIZER
NEW YORK UNIVERSITY
GLOBAL ENTITIES (CONTINUED)
SIEMENS
BAYER
AIRBUS INDUSTRIES
MAERSK
HSBC
TD BANK
H&M
ZARA
GLOBAL ENTITIES (CONTINUED)
SAMSUNG
LG INDUSTRIES
HYUNDAI
TOYOTA
MITSUBISHI
SONY
PANASONIC
FOXCONN
10
GLOBAL ENTITIES (CONTINUED)
LENOVO
HAIER
ALIBABA UNDER 2% OF E-COMMERCE REVENUE EARNED OUTSIDE OF CHINA
TENCENT UNDER 10% OF REVENUE EARNED OUTSIDE OF CHINA – GLOBAL?
BAIDU DE MINIMUS REVENUE EARNED OUTSIDE OF CHINA – GLOBAL?
BYTEDANCE
HUAWEI
INDUSTRIAL AND COMMERCIAL BANK OF CHINA (ICBC) – THE LARGEST COMMERCIAL BANK IN THE WORLD AS MEASURED BY BOTH TOTAL ASSETS AND MARKET CAPITALIZATION
integration
GLOBALIZATION IS FACILITATED BY ECONOMIC INTEGRATION, WHERE COUNTRIES BECOME INCREASINGLY LINKED TO EACH OTHER
WHAT TYPES OF ECONOMIC INTEGRATION EXIST?
FREE TRADE AGREEMENTS SUCH AS THE NORTH AMERICAN FREE TRADE AGREEMENT(NAFTA), THE DOMINICAN REPUBLIC-CENTRAL AMERICAN FREE TRADE AGREEMENT (CAFTA-DR), THE TRANS- PACIFIC PARTNERSHIP (TPP), EXCLUDING THE UNITED STATES
ECONOMIC UNIONS (THE EUROPEAN UNION)
ECONOMIC INTEGRATION
FREE TRADE AGREEMENTS
TAX-FREE FLOW OF GOODS FROM ONE PARTNER COUNTRY TO ANOTHER? YES
FREE FLOW OF LABOR? NO
FREE FLOW OF CAPITAL? NO
COMMON/SHARED CURRENCY? NO
ECONOMIC UNIONS
TAX-FREE FLOW OF GOODS FROM ONE PARTNER COUNTRY TO ANOTHER? YES
FREE FLOW OF LABOR? YES
FREE FLOW OF CAPITAL? YES
COMMON/SHARED CURRENCY? MAYBE
Regulation of trade
PRIMARY ORGANIZATION THAT OVERSEES TRADE IS THE WORLD TRADE ORGANIZATION (WTO), ESTABLISHED IN 1995 AS THE SUCCESSOR TO THE GENERAL AGREEMENT ON TARIFFS AND TRADE (GATT). GOAL OF WTO IS ELIMINATE BARRIERS TO AND PROMOTE FREE TRADE
CAN ACT AS JUDGE AND JURY IN TRADE DISPUTES
SOVEREIGN NATIONS CAN IMPOSE MEASURES TO PROTECT AGAINST UNFAIR TRADE PRACTICES. HOWEVER THE WTO CAN DECIDE IF THESE MEASURES ARE FAIR
WHAT ARE THE VARIOUS FORMS OF INTERNATIONAL TRADE AND GLOBALIZATION?
MERCHANDISE IMPORTS AND EXPORTS – TANGIBLE GOODS THAT ARE SENT INTO OUR OUT OF A COUNTRY. OFTEN REFERRED TO AS VISIBLE IMPORTS AND EXPORTS. BASED ON THE TABLE BELOW, FOR THE MONTH OF NOVEMBER, 2020 THE U.S. HAS A TRADE DEFICIT AS IT IMPORTS MORE GOODS THAN IT EXPORTS
| EXPORTS | IMPORTS |
| $184.2 BILLIOIN | $252.3 BILLION |
Forms of international trade and globalization
SERVICE IMPORTS AND EXPORTS – EARNINGS THAT ARE DERIVED FROM THE SALE OF EDUCATION, TRANSPORTATION, TOURISM, BANKING AND PROFESSIONAL (ACCOUNTING, ARCHITECTURAL) SERVICES. FOR THE MONTH OF NOVEMBER, THE UNITED STATES HAS A TRADE DEFICIT OR SURPLUS IN SERVICES?
SURPLUS
| EXPORTS | IMPORTS |
| $56.5 BILLION | $38.2 BILLION |
Reasons to internationalize
TO SECURE RAW MATERIALS/COMPONENTS – SECURE KEY SUPPLIES – MOTIVATION MAY BE TO SECURE AT LOWER COST THAN ON THE DOMESTIC MARKET OR NOT AVAILABLE ON THE DOMESTIC MARKET
TO SELL IN NEW MARKETS – MARKET SEEKING – EXPORT OF PRODUCT(S) PREVIOUSLY SOLD SIMPLY ON DOMESTIC MARKET – NEW CUSTOMERS AND SMOOTHS OUT CYCLICAL SALES – WHIRLPOOL SELLS AIR CONDITIONERS IN THE U.S. AND HAS ONE SELLING SEASON. IF IT EXPORTS TO SOUTH AMERICA IT NOW HAS TWO SELLING SEASONS
TO SECURE LESS EXPENSIVE PRODUCTION – LOW COST FACTORS OF PRODUCTION – LESS EXPENSIVE LABOR COSTS CREATED OPPORTUNITIES TO MANUFACTURE OUTSIDE OF THE MARKET IT WAS SELLING IN
TO SECURE INFORMATION – GLOBAL SCANNING AND LEARNING CAPABILITY – OVERSEAS CUSTOMERS/SUPPLIERS ALSO BECAME A SOURCE OF INFORMATION
TO SECURE COMPETITIVE POSITIONING – COMPETITIVE POSITIONING – WHERE AN ENTITY UTILIZES ITS STRENGTH IN ONE (PROTECTED) MARKET TO SUPPORT ACTIVITIES IN ANOTHER MARKET
Prerequisites and next steps
DOES THE ENTITY HAVE A COMPETITIVE ADVANTAGE? IN PRODUCTION, MARKETING, DISTRIBUTION? HOW DOES IT COMPETE IN THE FOREIGN MARKET WHERE THESE ADVANTAGES MAY BE INSUFFICIENT?
DOES IT HAVE THE ORGANIZATIONAL CAPABILITY TO LEVERAGE ITS STRENGTHS?
PROCESS
INCREMENTAL – STEP-BY-STEP
VS
IMMEDIATE INTERNATIONALIZATION VIA ACQUISITIONS
VS
BORN GLOBAL
MENTALITY
INTERNATIONAL – (INTERNATIONAL) PRODUCT LIFE CYCLE. ENTITIES VIEW INTERNATIONAL OPERATIONS/SALES AS SIMPLY AN ADDITION TO THEIR LOCAL BUSINESS
MULTINATIONAL – ENTITIES RECOGNIZE THE IMPORTANCE OF INTERNATIONAL OPERATIONS AND BEGIN TO “LOCALIZE” – RESPOND TO THE NEEDS OF THE LOCAL/FOREIGN MARKET
GLOBAL – BECAUSE OF THE COST OF LOCALIZATION, COMPANIES ATTEMPT TO DEVELOP ONE PRODUCT THAT MEETS GLOBAL NEEDS/TASTES. STANDARDIZATION.
TRANSNATIONAL – A REJECTION OF THE EITHER MUTLINATIONAL OR GLOBAL APPROACH. AN ATTEMPT TO RESPOND TO LOCAL NEEEDS OF A MULTINATIONAL ENTITY WHILE MAINTAINING SCALE OF A GLOBAL ENTITY
